Hon Jim Anderton

Member of Parliament for Wigram

Progressive Leader

11 November 2009 EMBARGOED UNTIL 9.30am Media Statement

Urgent inquiry into monetary policy now

We must put party politics aside and come up with a new approach to monetary policy which supports people in New Zealand who produce tradeable goods, rather than those who speculate on property and take the profits off-shore, says MP for Wigram and Progressive Party leader, Jim Anderton.

The Report from the Parliamentary Banking Inquiry was released today. The inquiry was held by the Progressive Party, The Labour Party and the Greens. The National-led government and its coalition partners refused to take part in the inquiry.

The report proves that the ‘big four’ Australian owned banks did not pass on all of the cut in the OCR (Official cash Rate). The Reserve Bank cut the OCR from its high in mid 2008 of 8.25 per cent, to only 2.5 per cent today. But the banks kept a one per cent margin in interest rates for themselves. One per cent extra interest added $787 million in costs for New Zealand businesses; $460 million extra to the cost of loans in the farming sector; and $1.6 billion to the cost of mortgage repayments.

“This tells us it doesn’t matter what the Reserve Bank does with interest rates; the big Australian-owned banks will do whatever they want. Changing the OCR rate to try and help businesses or home owners during hard times isn’t working.”

“Fifty organisations and individuals made submissions - from the New Zealand Manufacturers and Exporters Association to the Council of Trade Unions. Each of them asked the inquiry to put pressure on the New Zealand parliament and the Reserve Bank to review monetary policy now.”

“The government can no longer sit on the side-lines and say ‘there’s nothing we can do’.”

“We need to look at how we can remove incentives to invest in property, otherwise we’re headed for another boom and bust cycle in property prices, and another recession. Banks must be encouraged to lend to businesses; and we need to review our tax system which at the moment encourages unproductive property investment and discourages investment in the productive tradeable good export sector.

We need to look at regulating the banking sector so that ordinary New Zealanders don’t pay (in interest rates or hidden bank fees) while the Australian-owned banks make excessive profits.

“There’s always more we can do. We just need the political will to do it” says Jim Anderton.

ENDS

report_of_the_parliamentary_banking_inquiry.pdf

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